Over the weekend, European political leaders and central bankers
finally fashioned a package of measures designed to ward off the
sovereign-debt problems — felt most acutely in Greece — that had
shaken markets in recent weeks. The underlying economic and fiscal
challenges facing some European Union countries remain in place,
however. MIT News asked international finance scholar Kristin
Forbes PhD ’98, the Jerome and Dorothy Lemelson Professor of
Management at the MIT Sloan School of Management, about the
situation in Europe. From 2003 to 2005, Forbes served as a member
of the White House’s Council of Economic Advisors, under President
George W. Bush, and she worked in the U.S. Treasury Department from
2001 to 2002; she is also a research associate at the National
Bureau of Economic Research. Q. With world markets in tumult last
week, there was a lot of talk of “contagion” stemming from fears
about the situation...